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Why did the average duration of unemployment become so much longer?

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  • Mukoyama, Toshihiko
  • Sahin, Aysegl

Abstract

There has been a substantial increase in the average duration of unemployment relative to the unemployment rate in the U.S. over the last 30 years. We evaluate the performance of a standard job-search model in explaining this phenomenon. In particular, we examine whether the increase in within-group wage inequality and the decline in the incidence of unemployment can account for the increase in unemployment duration. The results indicate that these two changes can explain a significant part of the increase over the last 30 years, although the model fails to match the behavior of unemployment duration during 1980s.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Monetary Economics.

Volume (Year): 56 (2009)
Issue (Month): 2 (March)
Pages: 200-209

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Handle: RePEc:eee:moneco:v:56:y:2009:i:2:p:200-209

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Web page: http://www.elsevier.com/locate/inca/505566

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Keywords: Unemployment duration Wage dispersion Job search model;

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Citations

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Cited by:
  1. Machado, José & Portugal, Pedro & Guimarães, Juliana, 2006. "U.S. Unemployment Duration: Has Long Become Longer or Short Become Shorter?," IZA Discussion Papers 2174, Institute for the Study of Labor (IZA).
  2. Mukoyama, Toshihiko, 2013. "Understanding the welfare effects of unemployment insurance policy in general equilibrium," Journal of Macroeconomics, Elsevier, vol. 38(PB), pages 347-368.
  3. Bachmann, Ronald & Sinning, Mathias, 2012. "Decomposing the Ins and Outs of Cyclical Unemployment," IZA Discussion Papers 6362, Institute for the Study of Labor (IZA).
  4. Toshihiko Mukoyama & Aysegül Sahin, 2004. "Why did the average duration of unemployment become so much longer?," Staff Reports 194, Federal Reserve Bank of New York.
  5. Thomas B. King, 2005. "Labor productivity and job-market flows: trends, cycles, and correlations," Supervisory Policy Analysis Working Papers 2005-04, Federal Reserve Bank of St. Louis.
  6. Daniel Aaronson & Bhashkar Mazumder & Shani Schechter, 2010. "What is behind the rise in long-term unemployment?," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q II, pages 28-51.
  7. Della Lee Sue, 2008. "Unemployment Index: A Multidimensional Measure of Labor Market Efficiency," New York Economic Review, New York State Economics Association (NYSEA), vol. 39(1), pages 44-69.
  8. Nikita Céspedes & Ana Paola Gutiérrez & Vanessa Belapatiño, 2014. "Determinantes de la duración del desempleo en una economía con alta informalidad," Working Papers 2014-2, Peruvian Economic Association.
  9. Shigeru Fujita, 2011. "Declining labor turnover and turbulence," Working Papers 11-44, Federal Reserve Bank of Philadelphia.

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